Valued at a market cap of $17.3 billion, Alexandria Real Estate Equities, Inc. (ARE) is an urban office real estate investment trust (REIT) with a particular focus on collaborative life science, agtech, and technology campuses. The Pasadena, California-based company also provides strategic capital to transformative life science companies through its venture capital platform. It is expected to announce its fiscal Q4 earnings results after the market closes on Monday, Jan. 27.
Ahead of this event, analysts project the REIT to report an FFO of $2.39 per share, up 4.8% from $2.28 per share in the year-ago quarter. The company has surpassed Wall Street's earnings estimates in two of the last four quarters while missing on two other occasions. Its AFFO of $2.37 per share in the previous quarter slightly lagged behind the consensus estimates.
For fiscal 2024, analysts expect ARE to report an FFO of $9.47 per share, up 5.6% from $8.97 in fiscal 2023. However, in fiscal 2025, FFO is expected to decline 2.1% year-over-year to $9.27.
Shares of ARE have declined 20.9% over the past 52 weeks, significantly lagging behind both the S&P 500 Index's ($SPX) 26.3% rise and the Real Estate Select Sector SPDR Fund’s (XLRE) 3.5% return over the same time frame.
Shares of ARE fell 1.3% following its Q3 earnings release on Oct. 21, primarily due to a mixed earnings report. The adjusted funds from operations (AFFO) per share of $2.37 missed the consensus estimate, even though it grew 4.9% year-over-year. Investors were also cautious about the modest rental rate growth of 5.1% and a same-property NOI increase of just 1.5% year-over-year. Furthermore, while total revenue of $791.6 million exceeded expectations and leasing activity remained robust, 2024 AFFO per share guidance of $9.45 - $9.49 signaled constrained growth prospects, contributing to the decline in share price.
Wall Street analysts are moderately optimistic about Alexandria Real Estate’s stock, with a "Moderate Buy" rating overall. Among 14 analysts covering the stock, three recommend a "Strong Buy," and 11 indicate a “Hold.” This configuration is significantly more bullish than three months ago when six analysts suggested a "Strong Buy."
The average analyst price target for ARE is $119.69 indicating a 20.7% potential upside from the current levels.
